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WJR November 2006 Reports

Yesterday we got a revision up in GDP estimates and a big revision down in unit labor costs, which was music to the market’s ears, and if the futures hold up for another hour, the early going today should be more of the same.

Of course, you’d better be making capital gains is this environment, because your American dollars haven’t been worth less in a long time. The dollar is at a 14 year low versus the pound this morning. While that will help domestic companies that export their wares, it is slowly but surely pushing down the purchasing power of every dollar you have, whether you realize it or not.

Costco November same store sales were up 5 percent. That’s a little lower than expected, and Walmart now says the December sales are expected will be flat to up just one percent.

Heinz raised guidance on a good earnings report this morning. Pfizer also raised guidance. At 10’oclock we’ll get the monthly status update on Midwest manufacturing as the Chicago PMI is expected to read an even 54, up a bit from last month.

Overseas most major markets are up one percent or more overnight, Our futures have been solid all morning long. Adjusted for fair value, the S&P futures are up almost 3½ points, the Dow futures are up about 28 and the Nasdaq futures are about 3 points above fair value.

November 29, 2006

A bunch of weak economic data was offset by some steady-as-she-goes commentary out of Ben Bernanke yesterday as the market stabilized after the Monday sell-off. It looks like we may tack on some additional gains this morning, as long as we can survive the Gross Domestic Product number at 8:30. The best guess at the latest estimate of 3rd quarter GDP is an increase of only 1.8%. That’s hotter than the last-estimate of 1.6, but certainly wouldn’t be hot enough to fuel interest rate fears. Once again we’re hunting for Goldilocks here – not too hot, not too cold.

ConocoPhillips is selling Canadian oil and gas fields to Penworth Energy for over a billion dollars. That works out to a little less than 16 bucks per barrel of proven or probable oil reserves. With extracted oil going at over 61 bucks per barrel, you wonder what they are thinking about future prices.

There’s a big speech coming from Rick Waggoner at the Los Angeles Auto Show later today, reported focusing on electric vehicles.

Pfizer is cutting 20% of their sales force and it looks like Ford got almost half of their blue collar workers to agree to early retirement parties.

Stock futures are lower than they were earlier this morning. However, if they hold for the next hour, we’ll be looking at a slightly higher open for stocks. Adjusted for fair value, the S&P futures are up not quite 3 points, the Dow futures are up about 18 and the Nasdaq futures are about 1 ½ points above fair value.

November 28, 2006

Yesterday was certainly a change of pace. The stock market had its worst day since July, with the Dow Jones Industrials off over 150 points and the Nasdaq off over 2 percent. It was a day almost devoid of news after the Walmart sales disappointment. But today, as they say, will be different.

Fed Chairman Bernanke gives a speech. Alan Greenspan gives a speech. Two Fed governors give speeches. On top of that the Durably Goods number at 8:30 is expected to slip by 5 percent, and at 10 o’clock, we’ll get the October Existing Home Sales number. Also on the way is the Conference Board’s reading on Consumer Confidence, expected to read 108.

So what can we expect? Suffice it to say that SO many voices rarely sign in harmony. So up or down, we’re not likely to see another dramatic move.

Light sweet crude is up again this morning, at $60.65 per barrel.

Nokia and Palm are both out with earnings warnings this morning, and the futures are pointing to a slightly lower open. Adjusted for fair value, the S&P futures are down about a point, the Dow futures are down 8 and the Nasdaq futures are almost 4 points below fair value.

November 27, 2006

It’s estimated that over 140 million of us went shopping over the weekend. The big question for retailers is – will anybody be back next weekend. The bigger question for investors in retail stocks is did any of those 140 million people buy anything at much above cost?

Today, the Monday after Thanksgiving, is what’s known at Cyber Monday. It’s a huge day for shopping online. That’s because we’ve all had four days at home, and now that we’re back at the office, we can shop on company time, which of course, is a great deal.

Speaking of shopping, Walmart had expected that November same store sales would be flat with last November, when a lot of hurricane-related sales were made. Walmart now says that sales will actually slip a tenth of a percent, which is Walmart’s first monthly back-step in ten years. Walmart stock is looking to open about 40 cents lower this morning.

Lots of data flowing this week, but it doesn’t really start flowing until tomorrow.

Right now, it looks like we’ll see stocks on sale at 9:30, although the discount shouldn’t be much. Adjusted for fair value, the S&P futures are down 1 ½ points, the Dow futures are down 15 and the Nasdaq futures are about 4 points below fair value.

November 22, 2006

The giant has awoken. Dell computer reported a 12 percent increase in earnings last night. Profits were 30 cents per share versus the expected 24 cents, even though sales weren’t quite up to snuff. That means that Dell has margins heading north and the stock will see prices heading north today. Dell is quoted more nearly 10% higher in the pre-market.

We’ll get a bunch of data points pushed ahead to today, including the weekly jobless claims number and the weekly oil inventory data. Oil prices took a big ride up yesterday, but are easing to just below 60 bucks per barrel this morning.

The University of Michigan November Consumer Sentiment Index is expected to come in at 93.1. That’s at 9:45, but after we hit the noon hour, trading will no doubt taper off as traders who also have turkey-cooking responsibilities will likely hit the exits a bit early.

The futures are almost exactly where they were 24 hours ago. Right now, adjusted for fair value, the S&P futures are up 2 points, the Dow futures are up 17 and the Nasdaq futures are about 2 points above fair value.

November 21, 2006

Their job is to get the blood flowing and today they may get the money flowing as well. Shares of heart-stent makers got some good news last night. After the close of trading, Medtronic reported some traction in its heart device business. Sales at Medtronic were up 11 percent and Medtronic stock rose over 6 percent in Europe this morning.

Domestic same-store retail sales were up 1.2 percent last week, according to data from the International Council of Shopping Centers.

There are quite a few earnings reports on the docket for today, one of which will be Dell. Dell will issue their delayed quarterly numbers after 4 o’clock.

A barrel of January light sweet crude oil is going for about a half dollar more this morning due to some lousy weather in Alaska.

Every major overseas market is higher, although not by much. We should go high, but not by much at 9:30. Right now, adjusted for fair value, the S&P futures are up almost 2 points, the Dow futures are up 14 and the Nasdaq futures are about 2 ½ points above fair value.

November 20, 2006

It will be a short week for Wall Street, and this is the first morning in recent memory that we’re seeing some significant pressure on stock prices. Asian markets were sharply lower over night and Europe is lower as well, although it’s only off about ½ percent there on average.

It’s Monday, and that means mergers, and today we have a full slate. The big will become bigger in the copper mining industry. Freeport McMoran is buying Phelps Dodge for almost 26 billion dollars. That’s a 33% premium to Friday’s closing price.

The biggest deal ever in real estate is set as private equity flexes its muscle again. Blackstone is buying Equity Office Properties for 36 billion, including debt. That’s an 8 ½ percent premium.

In financial services, Charles Schwab is offloading its U.S. Trust unit, admitting that oil and water really don’t mix. Bank of America is buying U.S. Trust for $3.3 billion.

Lowe’s announced better than expected earnings for last quarter, but revenue was light and they lowered expectations for next quarter. That’s the fourth warning in nine months as the housing slowdown hits another business.

As I mentioned earlier, the futures are soft, but they are off of earlier lows. Right now, adjusted for fair value, the S&P futures are down about 2 ½ points, the Dow futures are down 22 and the Nasdaq futures are a little more than 5 points below fair value.

November 17, 2006

Another day, another record for the Dow Jones Industrial Average as the “Goldilocks” economy rolls along. Good earnings, low inflation numbers, falling oil prices – what’s not to like here?

Johnson & Johnson likes the heart stent system that Connor MedSystems sells. They like it so much that they are buying the company. Conor stock is indicated to rise about 18% this morning, and Johnson & Johnson is indicated higher as well.

The big earnings news last night came from Hewlett-Packard. Earnings were better than expected, the outlook is good. However, HP confirmed that the SEC has opened a formal investigation into the company’s boardroom leak scandal, and that news took the steam out of an after-hours rally in the stock last night.

Look out below, but after falling 2 ½ dollars per barrel yesterday, oil is down almost another dollar this morning at 55.30 per barrel.

Once again this morning the futures are very quiet, indicating no big change in stock prices if the market were to open right now. Adjusted for fair value, the S&P futures are down about a half-point, the Dow futures are down 3 and the Nasdaq futures are almost 3 points below fair value.

November 16, 2006

Again this morning, just like this past Tuesday, the futures are frozen like deer in the headlights in front of upcoming inflation data. At 8:30, we’ll get the October Consumer Price Index. Expect the headline number to drop 3 tenths of a percent, due largely to falling gasoline prices. The important number, however, will be the core CPI, which is expected to rise 2 tenths of a percent. That’s still at the top end of where Fed policymakers are even grudgingly comfortable. So, anything higher could put the big chill on our surprisingly strong stock market rally.

Dell and Walmart may be under some pressure this morning. Dell announced last night that they will delay their quarterly earnings report. And just in case you thought that irritating political demagoguery ended November 7th, Walmart may suffer from comments made by Congressmen Barack Obama and John Edwards yesterday. The two potential Presidential candidates pontificated on how Walmart should run their business, at least in their highly-esteemed views.

Overseas markets are very narrowly mixed, in front of the inflation data. Right now, adjusted for fair value, the S&P futures are just about flat, the Dow futures are up 3 points but the Nasdaq futures are 2 ½ points below fair value.

November 15, 2006

We don’t always appreciate what a bargain domestic airfares have been since airline deregulation. Of course, that’s a direct function of there being too many airline competitors out there. Well, fasten your wallets because another competitor may be going away. USAir is looking to buy the bankrupt Delta Airlines for about 8 billion dollars in cash and stock. They’ll operate under the Delta name if the deal goes through and will be the number 1 domestic air carrier. Delta has officially responded by saying “we’re not interested.” But, don’t be so sure that they won’t be bought be someone soon.

The big event of the day for the markets will be the release of the minutes of the latest Federal Reserve Open Market Committee meeting. Any hint that interest rates will be coming down next year could support another rally.

Just like yesterday, all the market action, should there be any, will also come later in the day as the futures are unusually uninteresting so far. Adjusted for fair value, the S&P futures are down less than a quarter of a point, the Dow futures are down 6 points and the Nasdaq futures are just about a single point above fair value.

November 14, 2006

The Big 3 automakers finally get their 45 minutes of attention from George W. Bush today, which breaks down to about 15 minutes apiece. That’s probably not quite enough time to explain all the problems they >

It was a tale of two big retailers this morning. I should say two tales, as they were very different indeed. Walmart beat earnings estimates by 2 cents per share on a 12 percent revenue increase, which is an 11 percent increase in profit from last year. The other tale was told by Home Depot, as the housing market’s troubles are starting to bite. Home Depot missed their number by 2 cents, missed their revenue number and lowered their full-year outlook. Same store sales at Home Depot were off over 5 percent.

At 8:30, the October Producer Price Index is expected to have fallen six-tenths of a percent, with the core rate rising one tenth of a percent.

Japanese stocks rose 1 2/3 percent overnight, but other overseas markets are relatively uninteresting, as are our futures so far. Adjusted for fair value, the S&P futures are up a half point, the Dow futures are down just 3 points and the Nasdaq futures are just about 2 ½ points below fair value.

November 13, 2006

After last week’s dearth of news, we’ll get plenty of big economic data this week, but that parade won’t start until tomorrow.

So far this morning, it’s another Monday of mergers. Small-scale stuff so far, but mergers nonetheless.

In the genetics analysis business, Illumina is buying Solexa at about a 44% premium, although that’s a stock deal, so the dollar value will likely fluctuate.

There’s another private equity buyout this morning, as Eddie Bauer is being acquired at a 12% premium to Friday’s closing price.

Asian markets were down overnight, but Europe a bit higher for the most part. Our futures, which were slightly positive a couple of hours ago have been slowly sinking ever since and at this point are indicating a whole lot of nothing. Adjusted for fair value, the S&P futures are down a point, the Dow futures are flat and the Nasdaq futures are now almost 2 points below fair value.

November 10, 2006

A weaker consumer confidence reading and a big kick higher in oil prices gave traders an excuse for some profit taking yesterday. But the only recurring theme from Tuesday’s election was selling pressure on the big pharmaceutical stocks, and that pressure continued in Europe this morning.

The International Energy Agency has lowered its projection for oil demand. That has taken some steam out of the oil rally, although light sweet crude is still comfortably above 60 bucks per barrel.

AIG and Disney are out with good earnings reports this morning, although Disney is indicated slightly lower in the pre-market.

Boeing got a big government contract. Its stock will move higher. Bauch & Lomb is looking weaker on an earnings miss.

One sort-of-big merger this morning as Genentech is buying Tamox at about a 46% premium to last night’s closing price.

Most markets overseas are slightly lower, but we should head for higher ground at 9:30. Adjusted for fair value, the S&P futures are up 2 points, the Dow futures are up 22 and the Nasdaq futures are now about 3 points above fair value.

November 9, 2006

Yesterday it was confirmed that the Democrats won both houses of Congress and Don Rumsfeld is on his way out. Those are big changes. But about midway through the day, the stock market finally figured out that the sun would indeed still rise in the morning, and while the players had changed, the show would undoubtedly go on. Accordingly, early losses were wiped out by the close and we would up with yet another record close on the Dow.

Although we’re almost devoid of economic reports this week, the earnings continue to roll in. Last night Cisco Systems reported earnings that easily beat estimates on a 25 percent sales increase. Cisco stock has risen about 50 percent over the past three months, and this morning the big broker UBS sees something it likes as UBS now recommends buying Cisco. They had been neutral on the stock.

Biovail, Viacom and King Pharmaceuticals also beat earnings estimates this morning.

Overseas markets are mixed. The Dow and the S&P won’t see a lot of movement early on, but the NASDAQ will get a boost out of the Cisco news. At this point, adjusted for fair value, the S&P futures are down about a point, the Dow futures are down 4 ½ and the NASDAQ futures are now about 9 points above fair value.

November 8, 2006

Yesterday, we didn’t know how the congressional election would turn out, and to some extent, control of the Senate is still in doubt. However, the stock market’s initial reaction, knowing what we know now, is not a big surprise. Futures are down across the board on the election results. All major markets overseas are lower as well.

In reality, once you get past the knee-jerk reaction, the market will adjust to the fact that no matter what the Senate result, we’re probably in for more gridlock than groundswell for the next two years, and the market generally likes an environment where the rules are not changing too quickly.

In the meantime, whether or not the Democrats take control of the Senate, drug stocks will be nervous, oil stocks will be nervous, Halliburton may be very nervous. One key issue to watch, as it pertains to your other investments, will be any proposed protectionist legislation. Any moves toward restricting free trade could be a real danger to the economy as we know it.

As I said earlier, the futures are indicating a lower open, but they’re off their worst levels of the morning. At this point, adjusted for fair value, the S&P futures are down about 4, the Dow futures are down 30 and the Nasdaq futures are about 6 ½ points below fair value.

November 7, 2006

We had been looking at six straight down days for the Dow Jones Industrial Average. Then yesterday alone, the Dow gained back about two-thirds of that six-day long loss and the Dow futures are looking to open a bit higher again this morning.

General Motors announced that the 3rd quarter loss wasn’t quite as big as reported earlier. As a result, GM’s overall 3rd quarter loss was just 16 cents per share, versus the previously reported 20 cents.

Luxury home builder Toll Brothers reported lower than expected revenue this morning and adjusted their outlook lower for the next year. They said that they expect that housing will recover more vigorously than people expect, but also said that that housing recovery is “nowhere in sight.”

We may not have skies of blue, but we have seas of green this morning as stocks prices are higher in every major foreign market.

We’re looking for a mixed, but mostly higher open for stocks this morning. Adjusted for fair value, the S&P futures are up almost a point and Dow futures are up 16. However, the Nasdaq futures are now just about a point or so below fair value.

November 6, 2006

It will be a light week for economic news, but there are plenty of big deals cooking this morning. Abbott Labs is acquiring Kos Pharmaceuticals. The offer of 78 dollars per share is a 56% premium to Friday’s closing price for Kos.

A lot of public companies have been going private lately, due in no small part to the onerous costs of Sarbanes-Oxley, and it looks like another big public company will be going private. Four Seasons will be bought out by an investment group that includes Bill Gates. That’s a 3.7 billion dollar deal that marks Four Seasons up 28% from Friday’s price.

As if worrying about tomorrow’s election results was enough, we have no fewer that four Federal Reserve presidents running around giving speeches today. Hopefully they can keep their interest rate mudslinging to a minimum.

Oil is 20 cents lower this morning. Overseas markets are generally up by ½ to 1 percent. We should head higher at 9:30 as well.

Right now, adjusted for fair value, the S&P futures are up about 4 points. the Dow futures are up 25 and the Nasdaq futures are almost 7 points above fair value.

November 3, 2006

They say that all politics are local. So are all jobs – the only jobs report that really excites most people is the paycheck that comes out every other Friday. But once a month, the national jobs report holds the stock market in suspense, and that’s exactly where we are this morning.

In less than ten minutes, the Labor Department is expected to announce that business created 125,000 new non-farm jobs last month, and that the average hourly wage rose three-tenths of one percent. In the sometimes-perverse world of stock prices, the lower both of those numbers are, likely the better for stock prices. Although if the new jobs number is TOO low, maybe under 50,000, it could compound fears of a hard landing for the economy.

Speaking of hard landings, shares of Red Robin Gourmet Burgers appear to be heading south for the winter. The stock looks to open about 25% lower this morning. Shares of Whole Foods, Qualcomm and Red Hat will also be under selling pressure. Electronic Arts looks to trade higher on some good earnings news.

Overseas markets are fairly flat. The futures on all three major stock indexes have spent most of the morning, and are still, within a couple points of fair value as we wait for the jobs report.

November 2, 2006

The consumer may finally be cooling off. Costco reported an October same store sales increase of 4 percent, versus the expected 4.6%, and then Walmart issued its November forecast, looking for sales to be essentially flat with last November. There are a couple of things to consider here – last November’s gas prices were significantly higher than today’s and both of those companies sell a lot of gas. Secondly, there was a lot of hurricane-related buying last year that thankfully, won’t be happening this year. However, all things considered, consumer spending, even for basic needs, looks to be cooling off as the home-equity piggy bank has run out of cash.

Oh, by the way, if you are wondering about sales of things that people may NOT really need, Sharper Image reported that October same-store sales comps are off 31 percent from a year ago.

In case you haven’t noticed, gold has been on a little tear lately and Barrick Gold says thank you very much. They beat earnings estimates by 2 cents. Transocean, the big oil services firm, beat by 11 cents per share.

The rally we were looking at an hour ago has been pared by the Walmart news, but we’re still looking for little green arrows at 9:30. Adjusted for fair value, the S&P futures are up almost 2 points, The Dow futures are up 15, and the NASDAQ futures are now about 3 points above fair value.

November 1, 2006

It’s not just about earnings reports today – although there are plenty of them running around. So far, among the S&P 500, almost three-quarters of companies reporting have beaten earnings estimates, and we’re looking at about a 14 percent year-over-year profit increase.

Traders may focus on words, rather than deeds today. Ben Bernanke is speaking at a conference in Washington, D.C. Although he’s not expected to make any earth-shattering policy announcements, his words will no doubt be parsed beyond reason as traders look for hints about the future of short-term interest rates. He is not expected to take questions.

At 10 o’clock, the October ISM index is expected to hold just about steady with the September reading of 52.9.

Japanese stocks were off a bit overnight, but stocks just about everywhere else overseas are higher at this hour. Adjusted for fair value, the S&P futures are up a little more than 2 points, The Dow futures are up 18, and the NASDAQ futures are now almost 5 points above fair value.

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